United States District Court, W.D. Texas
REPORT AND RECOMMENDATION OF THE UNITED STATES
HIGHTOWER, UNITED STATES MAGISTRATE JUDGE
THE HONORABLE LEE YEAKEL, UNITED STATES DISTRICT
this Court are Kinsale's Opposed Motion for Leave to File
Amended Answer to Assert Counterclaim, Instanter,
filed August 6, 2019 (Dkt. No. 16); Plaintiff's Opposed
Motion to Dismiss, filed August 13, 2019 (Dkt. No. 18); and
the Response and Reply Briefs. On September 10, 2019, the
District Court referred the above motions to the undersigned
Magistrate Judge for Report and Recommendation pursuant to 28
U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72,
and Rule 1 of Appendix C of the Local Rules of the United
States District Court for the Western District of Texas.
Texas Mutual Insurance Company (“Texas Mutual”)
issued a Texas workers' compensation and employers'
liability insurance policy to Quality South Texas Trucking,
Inc. (“Quality Trucking”), with a policy period
from August 18, 2017 to August 19, 2018 (“Texas Mutual
Policy”). Defendant Kinsale Insurance Company
(“Kinsale”) issued a commercial general liability
insurance policy to Quality Trucking, with a policy period
from August 18, 2017 to August 18, 2018 (“Kinsale
Policy”). Both Parties contend that they have no duty
to defend in an underlying state negligence lawsuit.
The Underlying Lawsuit
October 2017, SM Energy Company and Trinidad Drilling hired
Quality Trucking to move a large drilling rig from Catarina,
Texas, to a nearby location. Quality Trucking hired Steven
Martinez to help move the drilling rig. On November 3, 2017,
during the drilling rig move, Mr. Martinez was seriously
injured when his right leg was crushed by a crane operated by
Fred Gonzalez, the owner of Quality Trucking. Mr. Martinez
underwent five major surgeries, and ultimately had to have
his right leg amputated.
January 26, 2018, Mr. Martinez and his wife, Bertha Martinez,
individually and as next friends of their children (the
“Martinez Plaintiffs”), filed their first
negligence lawsuit against Quality Trucking, Trinidad
Drilling, SM Energy Company, and Fred Gonzalez. See
Martinez v. Trinidad Drilling, No. 18-01-1335-DCVAJA
(365th Dist. Ct. Dimmit County, Tex. Jan. 26, 2018).
notified of the underlying lawsuit, Texas Mutual informed
Quality Trucking that it had no duty to defend Quality
Trucking in the lawsuit because the Texas Mutual Policy
“covers only bodily injury arising out of and in the
course of an injured employee's employment by the
insured.” Dkt. No. 1-1 at ¶ 11. Because Mr.
Martinez had not alleged that he was an employee of Quality
Trucking, Texas Mutual took the position that there was no
coverage under the Policy. When Quality Trucking informed
Texas Mutual that Kinsale had also denied coverage under the
Kinsale Policy, however, Texas Mutual agreed to defend
Quality Trucking and Mr. Gonzalez in the lawsuit “with
gratuitous defenses as business courtesy.” Id.
at ¶ 12.
Texas Mutual notified Kinsale that Kinsale had the sole duty
to defend Quality Trucking in the lawsuit because the
Martinez Plaintiffs sought damages for bodily injuries and
Mr. Martinez was not an employee of Quality Trucking. Kinsale
denied it had a duty to defend the lawsuit, contending that
Texas Mutual was under a duty to defend.
Martinez Plaintiffs eventually non-suited their first state
court action and, on June 14, 2018, re-filed the case in Webb
County. See Martinez v. Trinidad Drilling, No.
001195-D3 (341st Dist. Ct. Webb County, Tex. June 14, 2018)
(“Underlying Lawsuit”). Mr. Martinez specifically
alleged in the Underlying Lawsuit that he was hired as
“an independent contract driver, ” and that he
“was not an employee of [Quality Trucking and Mr.
Gonzalez] at the time he sustained his injuries.” Dkt.
No. 1-1 at Exh. D, p. 3.
January 15, 2019, Texas Mutual again contacted Kinsale and
requested that Kinsale defend Quality Trucking in the
Underlying Lawsuit. Again, Kinsale took the position that it
had no duty to defend because Quality Trucking was covered
under the Texas Mutual Policy. Id. at Exh. C.
The Instant Lawsuit
April 17, 2019, Texas Mutual filed the instant lawsuit
against Kinsale in state court, seeking a declaratory
judgment under the Texas Uniform Declaratory Judgment Act
that “it has no duty to defend” and that Kinsale
does have a duty to defend Quality Trucking in the Underlying
Lawsuit. See Texas Mutual Ins. Co. v. Kinsale Ins.
Co., No. D-1-GN-19-002114 (126th Dist. Ct. Travis
County, Tex. Apr. 17, 2019). Texas Mutual ...